Alliance renault-nissan

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Assignment

Renault-Nissan

SM0376 Doing Business in Europe, Asia and the Americas. Module Tutor: Bill Houston Student Name: Guillaume CHETAIL Student ID: 08021534 26 may 2009

Renault - Nissan Alliance SM0376

Doing Business in Europe, Asia and the Americas

Guillaume CHETAIL 08021534

Northumbria University



Northumbria University

Table of Contents

1 - Question 1
1.1Definition of Alliance. 1.2 Renault - Nissan decision.

1 1 2 4 4 6 8 8 9 10 10 11 12 18

2 - Question 2
2.1 The impact of the differing negotiating styles on the initial agreement. 2. How the disparate corporate cultures of the two firms worked together during the initial period of the alliance.

3 - Question 3
3.1 Defining transactional, translational and economic risks and theoreticalsolutions. 3.2 The case of Renault Nissan

4 - Question 4
4.1 The Renault-Nissan alliance 4.2 The supply chain partners

5 - References 6 - Bibliography

Renault - Nissan Alliance SM0376

Doing Business in Europe, Asia and the Americas

Guillaume CHETAIL 08021534

Northumbria University

1 - Question 1
With reference to academic literature justify the decision of Renault andNissan to form an alliance in 1999. 1.1 Definition of Alliance.

To answer this question and understand the reasons behind Renault and Nissan’s decision, it is essential to define and the term alliance. An Alliance is sharing capabilities, such as R&D, marketing or manufacturing, between two or more firms with goal to enhance their profitability, their competitive advantages and creating a newbusiness without losing their own strategic autonomy. An alliance becomes strategic when it is designed to enhance the partners’ strengths and when it allows to follow the objectives defined at a corporate level (Ring.2000). A strategic alliance is sometimes defined as “a governance structure involving a incomplete contract between two separate firms and in which each partner has a limited control”(Lasserre.2003.p.99). According to Andrew C. Inkpen (2008.p389), cited in the Oxford Handbook of International Business, the strategic alliances is a collaborative organisational agreement that uses resources from more than one existing company. There are three important characteristics for strategic alliances. First, the different firms remain independent after formation of the alliance. Second, theorganisations are interdependent so this means that they are sharing management and control. This sharing can lead to complex and significant administration and coordination costs (Inkpen.2008.p.389-390). The formation of strategic alliances are made in the goal of gaining advantages (VAIDYA. 2005.p.259). Most of the time strategic alliances are defined as either horizontal alliances or verticalalliances. Each type can lead to particular advantages and risks. Horizontal alliances occur when the two (or more) partners are at the same level in the value chain. In opposition to the horizontal alliances, the vertical alliances are formed between partners situated at different levels in the value chain (Cavusgil, Knight & Riesenberger, 2008, p.116). As Renault and Nissan are both car makers,Renault - Nissan Alliance SM0376 Doing Business in Europe, Asia and the Americas Guillaume CHETAIL 08021534

1

Northumbria University

we will focus on the horizontal alliances (CNN.2001). The principal advantages of a horizontal alliance are to facilitate the entry into a new foreign market, to allow to fix the shared costs and share the risks of developing new technologies, to sharecomplementary competencies and to develop industry standards. One of the risks is that one of the company leaves after learning all the core competencies and the managerial efficiency of the other one. There is also a risk of merging or acquisition of the weaker company by the powerful one (VAIDYA.2005.p.259-260).

1.2 Renault - Nissan decision.

Now that we have defined the term alliance, we...
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